This post inspired by Justin Gramm describing how he feels about the referral fees.

Mr. Gramm doesn't accept referral fees because: "I just don't feel right asking to be compensated simply for taking an hour to do some research and refer my friend/client to a competent agent in another state."

Unlike Mr. Graham, many agents DO accept referral fees because:

1. Our experience through the day-to-day practice of real estate brokerage gives us the knowledge to identify agents qualified to serve the buyer's or seller's needs.

2. We are often well connected to industry professionals through networks like ActiveRain to identify qualified practitioners that match the buyers specific needs.

3. Agents are more responsive to another agent about their experience and specialties when seeking help for buyers with specialized needs.

4. When requested by a buyer or seller for an agent referral, the consumer relies on our experience and knowledge to meet an agent that will help them with their specific needs.

5. Experience and knowledge in real estate brokerage are acquired through practice, training and continuing education. That knowledge and experience is cumulative and compounds over time to give us the insights to identify good referral agents.

Even if it takes only an hour to identify a good referral agent, that hour reflects our training, practice and experience.

Making a quality agent referral has value, surely value equal to or more than some of the other tasks we perform for buyers and sellers.

Experienced agents and brokers understand that,

WE ARE PAID FOR WHAT WE KNOW, NOT WHAT WE DO.

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

"John. Congratulations on finding your home in New York so quickly. How did you find your agent?"

"Thanks Sue, the agent who sold our home in Virginia referred us to him. Yes, he did a wonderful job."

Lenn.... I don't have a problem with referral fees, as long as it doesn't get added to the borrowers bottom numbers and makes it more pricey. You pointed out some excellent reasons to why someone should be compensated. My only concern is at whose expense and how much. I am just making a general statement in regards to all referrals and not directly tied into realtors.. just my opinion. thanks

Lenn, thanks for this post. I read the post and could not disagree with a position more. My business like your is Internet based. I develop more leads than I can possibly handle, and so I refer out the leads. Many persons are helped by this. First of all buyers and sellers benefit when a good lead is handed out to a competentagent. They either can finally sell their home or buy the home of their dreams.

The next item is agents. I have many agents that make a great living each year from leads I give them. One cannot forget that real estate is a difficult business to survive in. We have no benefits, hospitalization, retirement, unemployment benefits or disability entitlements. 20% to charity? Why not 25%? Why not 30%? 35%? Why skim an extra 5-10% off the top for yourself? How self serving. Charity begins at home. Referrals are as basic to real estate as ABC! Most agents are more than happy to pay a referral fee for their hard work! They appreciate the opportunity for a lead to be thrown in their laps that they did not have to generate by knocking doors, cold calling or by spending big money on a marketing campaign! It puts food on the table, pays a doctor bill, pays for the car, puts gas in the tank, and lets us all live the Americandream! Hope their business models survives. I know mine will as long as there are referral fees!

I almost missed this post and I happily receive referral fees and I gladly pay them after I have done some thorough research on the agents. I expect them to do the same job I would and in just as meticulous a manner!

My first referral I sent out took me more than an hour to find the perfect agent! I do pay a referral fee and I would like referral fees in return. I gladly paid a 40% referral for my first one I received on AR. I received an ABUNDANCE of "back end" selling help from my referral partner.

Lenn- I definitely think that referrals are a good thing. I always get as much information as I can to pass along to the agent that I am referring to. I think that it is important that I give the agent I am referring to not just a name and contact number, but anything else that I may know that will best help that agent assist the client. I have received referrals that the agent literally has nothing other than a name and number. I sometimes get a bit annoyed that for that I need to pay out, but then I remind myself that I may never have gotten that lead if not for that referral. So in the end, any referral is worth a huge thank you to the sender!

Lenn- I just linked to Justin's post that you mentioned here. I do accept and pay referrals fees, butI also wouldn't have a problem referring a client to him, if he were the best suited for the job. I think that he makes some valid points about full disclosure- IMHO, anyway.

Lenn - I consider it a finders fee for matching a buyer to an agent. In the case of a buyer I am usually bringing a qualified buyer to the agent and not just a looky-loo. Seller referrals are those who I have determined are ready to list NOW. I believe in sending quality referrals to other agents - I think anybody would find value in that. I feel I am entitled to put a price on my time and efforts.

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